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Commentary
Pressure to move lower came from the news that Russia and Ukraine agreed to suspend strikes on energy facilities temporarily. The US says it will help Russia boost Ag exports and restore access to payments systems in return for a cease-fire in the Black Sea. Ukraine hopes to reopen a few ports to expand grain exports as a result as well. With Russian exports slow due to tight supplies and fears of an inflation increase, it is doubtful any grain corridor agreement will significantly boost Russian ag exports in the near term in my opinion. Egypt says their wheat reserves are enough for 4 months, down from 6 months late last year. Private weather services are saying only a few western Kansas and Nebraska counties received enough moisture in the last week to improve soil conditions while the rest of the area remained dry. From the Nebraska/Kansas border south to the Oklahoma/Texas border, very little moisture is expected over the next 10 days. If the Plains forecasts by early next week do not show better precipitation potential, weather premium may be needed.US Crop scouts are forecasting a much better chance of rains for the dry areas of both Southern Russia as well as the Ukraine and Eastern Balkans. In my view the trade will want to see coverage and amounts with the rainfall deficits seen in the region. The average trade estimate for Monday’s USDA March 31 Planting Intentions Report stands at 94.4 million acres of corn, up from 90.6 million acres last year and above the Ag Forum estimate of 94.0 million. Soybean plantings are seen at 83.8 million acres, down from 87.1 million last year and a shade below the 84.0 million acres prior USDA guesstimate. All-wheat acreage is seen at 46.5 million acres, up from 46.1 million last year but a half-million below the Ag Forum. For Chicago wheat we are nearing major levels of support. Failure to hold here in my opinion would open the floodgates to the 10 percent down for the year mark at 4.96 and major trendline support at 4.92. For the bulls to regain a foothold here, we need closes above 5.51 and 5.55. Should this occur I look for 5.73 to be retested, which is a major trendline and 50 week moving average.
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Sean Lusk
Vice President Commercial Hedging Division
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